from their owners. So, the corporate structure limits an owner’s liability for business debts to the cost of his or her stock. A corporation faces generally unfavorable tax treatment, viagra cialis for salewhy use viagra however, unless its shareholders opt to operate as an S corporation. S corporations blend the limited liability of C corporations with the tax benefits of flow-through entities, such as partnerships or proprietorships.

income statements won’t show federal income tax canadianpharmacy-drugstorerx.com expense, and their balance sheets won’t include deferred tax assets or liabilities.

Private C corporations, for example, tend to maximize salaries viagra online uk paid to shareholder-employees in lieu of paying dividends. Reasonable salaries are deductible for tax purposes, but dividends are not. This strategy distributes cash to owners while it minimizes the amount of double taxation.

The tradeoff between owners’ compensation and dividends means that a C corporation borrower could appear less profitable than an otherwise identical S corporation borrower, simply by virtue of its tax-planning strategies.

Modifying due diligence

When comparing S and C corporations, lenders must know these differences and adjust their analyses femaleviagra-cheaprxstore.com accordingly to avoid apples-to-oranges comparisons. Always check what type of entity you’re dealing with beforehttp://viagravscialis-topmeds.com/ reviewing a borrower’s financial statements.

Borrowers with weak internal controls expose you to greater risk of fraud and misstatement than those with solid internal controls. So, understanding your borrowers’ control systems is an important part of loan due diligence.

Master the basics

Internal controls are processes set forth by an entity’s board of directors, management, and other personnel. According to the Committee of Sponsoring Organizations of the Treadway Commission (COSO), controls should be “designed to provide reasonable assurance [of] the achievement of objectives in the effectiveness and efficiency of operations, reliability of financial reporting, and compliance with laws and regulations.”

Environmental factors include the integrity, ethical values, management operating style and delegation of authority systems. The “tone at the top” is a fundamental building block for all other control components.

Risk assessment. Companies should be aware of relevant risks and decide on the best ways to manage them.

Control activities. These are the policies and procedures that ensure management’s directives are carried out. Examples of control activities are authorization of transactions, accounting reconciliations, supervisory reviews of operating performance, physical security of assets, and segregation of duties.

Monitoring.Companies should continually review and improve internal control performance.

Managers and internal auditors viagra where do i get it should assess whether internal controls are adequate and explore ways to improve controls. AICPA auditing standards also require external auditors to evaluate their client’s internal controls as part of their audit risk assessment procedures. Auditors tailor audit programs for potential risks of material misstatement, but they aren’t required to specifically perform procedures to identify control deficiencies — unless the client hires them to perform a separate internal control study.

identify internal control problems is to have management letters for every loan file. They provide constructive criticism of a borrower’s control systems from the perspective of an independent third party.

Specifically, Statement on Auditing Standards (SAS) No. 115, Communicating Internal Control Related Matters Identified in an Audit, requires auditors to consider whether controls are sufficient to prevent and detect financial statement misstatements or theft of company assets, as well as whether they enable management to correct misstatements in a timely manner. SAS 115 requires auditors to report otc viagra any material weaknesses and significant deficiencies (see the sidebar “Which deficiencies make it to the management letter?”), including those remedied during canadianpharmacy4bestlife the audit.

Internal controls have been top of mind with auditors since the Sarbanes-Oxley Act passed in 2002. Today, management letters genericcialis-2getrx.com are more in-depth and helpful to financial statement readers.

disclose findings from prior periods that have yet to be genericcialis-2getrx.com remedied by management. If they continually report the same deficiencies from pharmacy ontario canada year to year, lenders should ask why management is reluctant to resolve deficiencies in their controls. Some gaps may seem

minor — separating billing and cash receipts in a small family business, for example. But other gaps may put you at excessive risk.

Ideally, a management letter should accompany a borrower’s financial statements in an audit, but SAS 115 allows auditors 60 days from the audit report release date to compile their findings. If the management letter has been omitted from a borrower’s financial statements, ask for a copy as soon as it’s available.

that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis.”

A significant deficiency is “less severe than a material weakness, yet important enough to merit attention by those charged with governance.” Note that a control deficiency is dependent on the potential for misstatement; misstatement need not actually bb online pharmacy have occurred.

SAS 115 permits significant leeway in how auditors classify internal control weaknesses, such as lack of segregation of duties, inadequately

When classifying deficiencies as material or significant, auditors evaluate the probability and magnitude of the potential misstatement. They also consider “compensating controls,” which are substitute procedures that limit the potential of a deficiency to result in an actual misstatement.

Abstract: With priced-right sales opportunities ripe for the picking, some customers may be tempted to acquire another business as the economy mends. Others — those feeling the strain of the prolonged cialis 5 mg doesn’t work downturn — may be considering a merger with another, stronger business. In either scenario, a bank may be asked to provide financing. Here are some questions viagra for sale a lender should consider when sorting the potential winners from losers in a merger or acquisition deal.

8 questions to consider in M&A deals

With priced-right sales opportunities ripe for the how to spot fake viagra pills picking, some of your customers may be tempted to acquire another business as the economy mends. Others — those women viagra feeling the strain of the prolonged downturn — may be considering a merger with another stronger business.

In either scenario, you may be asked to provide is cialis dangerous financing. Here are some questions to

for acquiring another company. For instance, is it seeking economies of scale, production synergies or personnel from the deal? Acquisition targets that won’t accomplish the borrower’s overall strategic goals are a poor fit.

2. Does your borrower have a competent due diligence team?Problems may not be apparent to borrowers in an acquisition mode. In the midst of negotiations, due diligence pharmacy online can help your customer gauge success or failure. Business owners typically put together a due diligence team with managers from generic viagra made in usa their company’s functional departments. These in-house experts can help assure lenders that all risk factors and contingencies have been addressed.

Before approving the loan request, determine what procedures were used in the due diligence process, and make sure you’re comfortable with the due diligence team’s performance. When due diligence is performed too hastily viagra generic canada or its scope is too narrow, the borrower may overlook important risk factors, such as contingent liabilities, concentration risks and employee retention problems.

4. What’s the financial forecast?To get a sense of the acquisition target’s historic and future earnings, the due buy cialis free shipping diligence team should make sure income and cash flow projections are complete and reasonable. Balance sheet items also should be investigated, and assets inspected to evaluate overall quality and obsolescence. Contingent

5. Have operations been properly analyzed? The due diligence team should tour the target’s viagra online facilities and, if possible, interview key personnel, customers and suppliers. The goal should be to identify company-specific risk factors,

including obsolete assets, concentration risks and poor internal controls. The borrower’s production manager should flowchart the target’s production process on site to identify core competencies and operating maladies.

human resources? Among a company’s most valuable — but transitory — assets are its employees. The compatibility of corporate cultures is key. The due cialis buy online canada diligence team must review the target’s HR policies and determine how salaries and benefits will change after the proposed merger or acquisition. To improve employee retention and guarantee the seller’s ongoing cooperation after the deal closes, otcviagra-norxpharmacy.com employment contracts, noncompete agreements or consulting arrangements also must be reviewed.

8. What are your customer’s postmerger expectations? Beware of the unrealistic. Purchase prices are typically based on projections of future income streams, including future http://femaleviagra-cheaprxstore.com/ cost savings and revenue opportunities. Many transactions fail because purchasers overestimate acquisition synergies and economies cialisotc-bestnorxpharma.com of scale. Borrowers also may overlook the full costs of improving production or integrating two companies into one. Make sure your customers devise detailed action plans.

When commercial lenders have advance knowledge of hidden risks and liabilities, they can advise customers on ways to minimize their potential exposure and possibly preempt loan defaults. Or they may decide to deny a loan altogether. Read More »

Lenders often have a stake in private company mergers and acquisitions, so it’s important that they know whether the target’s price is reasonable. Procuring a professional appraisal upfront can mean the difference between a long-term lending relationship and default. To help make informed lending decisions, lenders should know the standards of value used by appraisers, along with their valuation methodologies. A sidebar to this article points out the dangers of relying on generic valuation formulas. Read More »

Roth IRAs, despite their attractive features, have yet to match the popularity of traditional IRAs. As of 12/31/08, $3.5 trillion was invested in traditional IRAs compared to $165 billion in Roth IRAs. One

main reason why Roths constitute such a small percentage of total retirement assets is that high net worth individuals – who potentially stand to benefit the most from them – have been ineligible to contribute directly to one or convert their existing traditional IRAs to a Roth. Read More »

In a downturned economy, operating inefficiencies can push shaky companies over the edge. On the other hand, healthy supply chain management can help avoid inefficiencies. A strong system displays these chief characteristics: Read More »

Internal controls are a system of policies and procedures businesses put in place to protect assets and improve operating efficiency. Internal controls specify how companies direct, monitor and measure their resources. Moreover, they are your borrowers’ first line of defense against fraud. Read More »

Forget net income and book net worth. When it comes to monitoring creditworthiness, cash is king. Every business experiences occasional cash shortfalls — that’s why they need lines of credit — but borrowers with chronic cash deficits may be on the brink of default. Read More »

As a business valuation professional, I regularly appraise the value of privately-held companies. Difficult economic conditions require that we carefully study the unique facts and circumstances of the subject-company. Not every business can be “painted with the same brush”.